Bitcoin proved to be a resilient asset, if not a stable or useful currency, during the global financial meltdown in March, according to analysts from one of the world's largest investment banks.
Bitcoin is an exception in the crisis
In a customer note released on June 11, analysts at JPMorgan Chase & Co. describe how bitcoin has gone from being a fairly unrelated asset to one whose price follows traditional stocks more closely.
"Although the correlations have been modest and mostly reversed around zero on average for most of the past two years, they have increased significantly in some cases (stocks) and in others (dollar, gold) in recent months," wrote the team of strategists led by Joshua Younger.
The report also found that liquidity on the main bitcoin exchanges was surprisingly more resistant than that of traditional assets such as stocks, gold, U.S. treasury bills and foreign exchange.
The results of their analysis "suggest that bitcoin has seen some of the most severe liquidity falls around the peak of the March crisis, but that the outage was cured much faster than other asset classes," the researchers wrote. .
Stablecoins, whose values are generally pegged to government currencies, received a brief mention and were described as relatively "unscathed" by the March turbulence. From March 2 to March 23, the S&P 500 plunged 29%.
JPMorgan analysts calculated that cryptocurrencies successfully passed their first stress test during this period, despite price volatility. During the March panic, cryptographic valuations did not differ much from their intrinsic values, showing little flight towards liquidity within the asset class, analysts wrote.
bitcoin hasn't always lived up to its reputation
Although the structure of the crypto market during this period was more resistant than its traditional counterparts, according to the report, bitcoin - here the quotation - has not always lived up to its reputation.
"There is little evidence that bitcoin and other cryptocurrencies were a safe haven (or" digital gold ") - rather, its value appears to have been strongly correlated with risky assets such as stocks," the report concluded. "All of this probably indicates the continued survival of the asset class, but probably even more as a vehicle of speculation than as a medium of exchange or store of value."
The analysts' assessment differs sharply from previous comments from JPMorgan's president and CEO, Jamie Dimon, who labeled bitcoin as a "fraud" at the height of the 2017 bull market.
During the subsequent crypto winter, financial service giants such as Fidelity and ICE began to lay the groundwork for potential institutional investments in the asset class. JPMorgan Chase has been experimenting with blockchain technology since 2016 and recently started counting two of the largest U.S. cryptocurrency exchanges, the first megabank customers in the industry.
